June 12, 2023
ISLAMABAD – Prime Minister Shehbaz Sharif on Sunday said that the first cargo of discounted crude from Russia has arrived in the country, adding that the discharge of oil will commence tomorrow (June 12).
“I have fulfilled another of my promises to the nation. Glad to announce that the first Russian discounted crude oil cargo has arrived in Karachi and will begin oil discharge tomorrow,” the premier tweeted.
“Today is a transformative day. We are moving one step at a time toward prosperity, economic growth, energy security, and affordability,” PM Shehbaz said.
He stated that the arrival of the first-ever Russian oil cargo in Pakistan was the beginning of a “new relationship between Pakistan and the Russian Federation”.
“I commend all those who remained part of this national endeavor and contributed to translating the promise of Russian oil import into reality,” the prime minister added.
Last year, Finance Minister Ishaq Dar had announced that the country was considering buying discounted Russian oil, pointing out that neighbour India had been purchasing oil from Moscow and Islamabad also had a right to explore the possibility.
Subsequently, State Minister for Petroleum Musadik Malik had flown to Moscow for talks on issues including oil and gas supplies after which the government announced that it would purchase discounted crude oil, petrol, and diesel from Russia.
In January 2023, a Russian delegation arrived in Islamabad for talks to finalise the deal. During the three-day meeting, the countries decided to address all technical issues — insurance, transportation and payment mechanism — to sign an agreement by late March this year.
“After consensus on the technical specifications achieved, the oil and gas trade transaction will be structured in a way it has a mutual economic benefit for both countries,” a joint statement issued by the two sides had then stated.
In April, Malik had said Pakistan had placed its first order for discounted Russian crude oil under a deal struck between Islamabad and Moscow.
He had also said that imports were expected to reach 100,000 barrels per day (bpd) if the first transaction went through smoothly. Pakistan’s Refinery Limited (PRL) will initially refine the Russian crude in a trial run, followed by Pak-Arab Refinery Limited (Parco) and other refineries, Malik added.
As a long-standing Western ally and the arch-rival of neighbouring India, which historically is closer to Moscow, analysts said the crude deal would have been difficult for Pakistan to accept, but its financing needs are great.
Discounted crude offers respite as Pakistan faces an acute balance-of-payments crisis, risking a default on its debt obligations. Energy imports make up most of the country’s external payments.
Currently, 80 per cent of Pakistan’s oil requirements of roughly 154,000 barrels per day are being met by traditional Gulf and Arab suppliers, mainly Saudi Arabia and the UAE. The 100,000 bpd from Russia in theory would greatly reduce Pakistan’s need for Middle Eastern fuel.
On the other hand, Pakistan’s purchase gives Russia a new outlet, adding to Moscow’s growing sales to India and China, as it redirects oil from Western markets because of the Ukraine conflict.